
BENGALURU: The Directorate General of GST Intelligence (DGGI), Bengaluru Zonal Unit, has busted a major scam that caused the state and the central governments a loss in GST revenue of Rs 665 crore and a stock market scam of nearly Rs 3,200 crore. Two masterminds have been arrested, while the key mastermind is on the run, said an official release from the DGGI.
The scam had been taking place for the last eight years in Bengaluru and Mumbai. The DGGI was investigating the issue for the last seven months and the arrests have just been made, said a GST official. “The shocking aspect was that nine out of 15 companies involved in the scam have even listed on the Bombay Stock Exchange and lakhs of people have bought their shares. The exact loss caused to the public can be gauged only by the SEBI,” he said.
An official release said searches were carried out on over 30 premises in Bengaluru and Mumbai. “Investigations unearthed 15 dubious companies with no business activity. They called themselves service providers for IT, support services, management consultancy and advertising services and have a huge number of inward e-bills but not a single outward bill. The company offices are physically present with individuals appointed for meagre sums, who have no connection with the business. The companies in Bengaluru had supplied them receipts for FMCG products like biscuits, chocolates and other items.”
The GST returns of these companies were filed from a common IP address, exposing that the same mastermind managed them all, he said. “Through such practices, they have caused a GST loss of Rs 665 crore to both governments as this tax is generally paid from the input credit by companies,” he added.
The investigation further revealed that after listing in the stock exchange, the companies carried on circular trading (trading within themselves) to inflate the turnover and thereby get better bank loans and much higher share prices. “The promoters later exit these shares and public stand duped for investing in such non-existent companies,” the official added.
If SEBI had carried out regular GST audits, these companies would have got exposed long ago, he said.